MERGER AND MANDATORY GOLF CLUB MEMBERSHIP
IN CIRCUIT COURT OF THE
NINETEENTH JUDICIAL CIRCUIT
IN AND FOR MARTIN COUNTY,
CASE NO. 432004CA1006
F. GRANUZZO, his wife,
WILLOUGHBY GOLF CLUB. INC. and
GEORGE F. MCLEAN and JOAN T. MCLEAN,
husband and wife, individually and as
representatives of a class,
This case came before the Court on Plaintiffs' Amended Complaint and Amendment to Amended Complaint and on Defendants' Answer and Affirmative Defenses. The court heard testimony, received exhibits and heard argument of counsel.
FINDINGS OF FACTS
1. Plaintiffs are the owners of a single-family home in Willoughby, a gated, residential community of 375 single-family homes in Martin County, Florida. Included within Willoughby is a private golf course and country club. Plaintiffs purchased their property in April, 1995.
2. Defendant, WILLOUGHBY GOLF CLUB, INC, is the present homeowners' association for the Willoughby community.
3. Defendants, GEORGE F. MCLEAN and JOAN T. MCLEAN, are representatives of a class of owners within the Willoughby community.
4. Plaintiff filed this lawsuit against Defendants challenging certain amendments to the Willoughby Declaration of Covenants, Conditions and Restrictions for Willoughby (Original Declaration); and the merger of the then Willoughby Golf Club, Inc. (owner of the golf course and country club) with the then Willoughby Community association, Inc. (homeowners' association).
5. Count I of this Amended Complaint is for a judicial determination that the Amended and Restated Declaration of Covenants, Conditions and Restrictions for the Willoughby community is unreasonable. Count II is for a judicial determination that the merger created an unreasonable restraint on the alienation of Plaintiffs' property. Count III is for a judicial determination that the Amended and restated Declaration of Covenants, Conditions and Restrictions is unfair and unreasonable. The court previously entered a Summary Judgment in favor of Defendants on Count II.
6. When Plaintiffs purchased their property in 1995, it was subject to the Original Declaration.
7. In December 2003, Willoughby Golf Club, inc. merged with Willoughby Community Association, Inc. The surviving entity, Willoughby Golf Club, Inc. is the homeowners' association for Willoughby.
8. Also in December 2003, prior to the effective date of the merger, Willoughby Community association, Inc recorded the Amended and restated Declaration of Covenants, Conditions and Restrictions for Willoughby Golf Club, Inc. in the public records of Martin County, Florida.
9. Plaintiffs have stipulated that the vote for the merger and amendment was procedurally correct.
10. Prior to its amendment, the Original Declaration contained the following provision;
Article II. Property Rights
"Every owner shall have a right and easement of enjoyment in and to the Common Area, subject to this Declaration as it may be amended from time to time and to any restrictions or limitations contained in any deed conveying such property to the Association."
Article II. Property Rights
"No owner or occupant gains any right to enter or use the Golf Club facilities by virtue of ownership or occupancy of a Unit."
Article VIII: Annexation of Additional Property,
Section 3. Acquisition of Additional Common Area
"Declarant may convey to the Association additional real estate, improved or unimproved, located within the properties described in "Exhibit 'A' or 'B' which upon conveyance or dedication to the Association shall be accepted by the Association and thereafter be maintained by the Association at its expense for the benefit of all of its Members."
Article VIII: General Provisions
Section 2. Amendment .... "Thereafter or otherwise, this Declaration may be amended only by the affirmative vote (in person or by alternate) or written consent, or any combination thereof, of Voting Members representing sixty-seven (67%) percent of the total votes in the Association, including sixty-seven (67%( percent of the votes held by Members other than the Declarant, and the consent of the class 'B' Member, so long as such membership exists."
Article XVI: Golf Club
Section 1. General "Neither membership in the Association nor ownership or occupancy of a Unit shall confer any ownership interest in or right to use of the Golf Club.
Section 2. Conveyance of Golf Club
...."Notwithstanding the above under no circumstances shall the Golf Club be conveyed to the Association and no owner shall have any right or interest in the Golf Club by virtue of ownership or occupancy of a Unit."
11. The amended and Restated Declaration made several changes in the definition and added some new definitions. For the purposes of this lawsuit, there were two significant changes. First, the provision in Article XVI, Section 2, Conveyance of Golf Club that prohibited the conveyance of the Golf Club to the Association was deleted. The second significant change is the new requirement that all property owners become at least social members of the country club.
12. Included within the new requirement that all property owners become at least social members of the country club is the new requirement that all property owners have to share in the expenses of the maintenance and upkeep of the country club facilities, other than the golf course. All property owners are also now responsible for a yearly food and beverage minimum in the country club restaurant of $1,200 plus taxes.
CONCLUSION OF LAW
The first issue to be decided by the court is whether the amendment to the Declaration of Covenants, Conditions and Restrictions for Willoughby (Original Declaration) was valid. Article XIII, Section 2. Amendment of the Original Declaration provided that the Original Declaration could be amended by a vote of sixty-seven percent of the voting members. There is no dispute that the sixty-seven percent voting requirement was met and that the amendment was done procedurally correctly.
In Florida, a reservation of the right to amend declarations of restrictions and protective covenants is valid and enforceable, but this right of amendment is not without limitations. In Flamingo Ranch Estates, Inc. vs. Sunshine Ranches Homeowners, Inc. 303 So.2d 665 (Fla. 4th DCA 1974), the Fourth District Court of Appeal discussed the right of amendment and its limitations:
"In a sense, there is an inherent inconsistency between an elaborate set of restrictive covenants designed to provide for a general scheme or plan of development (generally considered to be for the benefit of the respective grantees), and a clause therein whereby the grantor reserves to itself the power at any time in its sole discretion to change or even arbitrarily abandon any such general scheme or plan of development (a power which is solely for the benefit of the grantor). When such occurs, as it has in this case, rules of construction require that clauses which are apparently inconsistent with or repugnant to each other were given such an interpretation and construction as will reconcile them, if possible. Fla. Jur. Contracts Section 91.
In the instant case, this can be done by reading in the reservation clause a requirement of reasonableness, such as suggested by the court in Johnson v. 3 Baya Property, suprs. We hold, therefore, that the clause in the Declaration of Restrictions, which reserves to the owner 'the right to alter, amend, repeal or modify these restrictions at any time in its sole discretion' is a valid clause so long as it is exercised in a reasonable manner as not to destroy the general scheme or plan of development."
This limitation on the right to amend was subsequently recognized and approved by the Florida Supreme Court in Nells vs. Loch Haven Homeowners' Association, Inc., 413 So.2d 28 (Fla. 1982).
The requirement tat the amendment not destroy the general scheme or plan of development is not limited to the physical layout or appearance of the development. Holiday Pines Property Owners Association, Inc. vs. Wetherington, 596 So.2nd 84 (Fla. 4th DCA 1992), and Volusia County vs. Aberdeen at Ormond Beach, L.P., 780 So.2d 126 (Fla. 2000).
The Holiday Pines case involved two amendments to protective covenants and restrictions, one made in 1983 and the second in 1987. The 1983 amendment created a homeowners' association for the purpose of establishing and amending regulations regarding the use of property within the development. The 1987 amendment amended the covenants to provide an enforcement mechanism by making membership in the homeowners' association mandatory; requiring the payment of dues to the association; and providing for the creation and enforcement of liens against property owners upon their failure to pay fees, dues or other charges or assessments. In declaring the 1987 changes, including the requirement of mandatory membership, unenforceable, the court stated:
"With respect to the 1987 amendments, we agree with the trial court that they create a fundamental change in the scheme of the development. By creating a mandatory membership in a homeowners' association having far ranging powers of enforcement, maintenance, and rule enactment, the restrictive covenants have in effect changed this subdivision to a quasi-condominium development. That difference is significant. A subdivision with restrictive covenants retains to the homeowner a degree of individual control over the owners' property that is lost when mandatorily transferred to a homeowners' association."
"Similarly, the mandatory nature of the homeowners' association together with their increased powers of regulation, management and liening authority, have significantly restricted the lot owner's use of his or her property. People elect not to purchase in condominiums because they do not want to restrict their control over their own property. This is not a continuation of a scheme of development, but a radical change of plans, altering the relationship of lot owners to each other and the right of individual control over one's own property."
The Defendants contend that amendments to declarations of covenants and restrictions may have a "certain degree of unreasonableness" but still remain valid and enforceable. They cite Eastpointe Property Owners Association, Inc. vs. Cohen, 505 So.2d518(Fla. 4th DCA 1987), a property owners' association case, for the proposition that the Fourth District Court of Appeal applies the same analytical reasoning used in reviewing condominium declaration amendment cases. While the Eastpointe case does not specifically say that, it does apply condominium case decisions in deciding a homeowners' association case. But the issue in Eastpointe was about the interpretation of the terms "improvement" and "structure" in a dispute over a homeowner's installation of awnings on his property. The Eastpointe case involved a restriction on the use of a home owner's property, not the issue of validity of amendments to declaration of covenants and restrictions, as is this case.
Using a line of condominium cases, Defendants cite Hidden Harbour Estates, Inc. vs. Basso, 393 So. 2d 637 (Fla. 4th DCA 1981).
The Hidden Harbour was a use restriction case, not an amendment case. The court in Hidden Harbour said:
"Thus, although case law has applied the word "reasonable' to determine whether such restrictions are valid, this is not the appropriate test, and to the extend that our decisions have been interpreted otherwise, we disagree. Indeed, a use restriction in a declaration of condominium may have a certain degree of unreasonableness to it, and yet withstand attack in the courts."
The Defendants also cite the condominium case of Woodside Village Condominium Association, Inc. vs. Jahren, 806 So. 2d 452 (Fla. 2002) The issue is Woodside was the validity of amendments to a declaration of condominium, thus Woodside is an amendment case and not a restrictive use case. In citing Woodside, Defendants argue that since the amendments were approved by the property owners, they should be presumed valid and upheld unless it is demonstrated that the amendments are arbitrary, against public policy, or are in violation of some fundamental constitutional right. The Supreme Court in Woodside said that restrictions contained within declarations of condominiums should be clothed with a very strong presumption of validity when challenged, and that the condominium owners challenging the amendment were "... on notice that the unique form of ownership they acquired when they purchased their units in the Woodside Village Condominium was subject to change through the amendment process, and that they would be bound by properly adopted amendments," This court again notes that the Woodside is a condominium case, not a property owners' case and that the Supreme Court observed that there is a difference between condominium life and other form of property ownership. "From the outset, courts have recognized that condominium living is unique and involves a greater degree of restrictions upon the rights of the individual unit owners when compared to other property owners". Woodside, supra at page 4.
It is this court's determination that the standard of review to be used in this case to decide whether or not the amendments are valid and enforceable is whether or not the power to amend the Original Declaration was exercised in a reasonable manner so as not to destroy the general scheme or plan of development of the Willoughby community.
Using that standard, the court hereby declares that the amendments were not exercised in a reasonable manner and do have the effect of destroying the general scheme or plan of Willoughby. The fact that property owners who purchased in Willoughby, knowing that they were not required to become members of the the golf course or country club, at any level of membership, and now are required to become at least social members with the obligation to contribute to the maintenance and upkeep of the country club facilities and are also now responsible for a $1,200 annual food and beverage minimum, leads this court to that conclusion.
As additional reason this court comes to this conclusion is that the deletion from Article XVI, Section 2, Conveyance of Golf Club, that under no circumstances would the Golf Club be conveyed to the Association, is a substantial change in the organization and ownership of property in Willoughby.
The second issue, the merger of the Willoughby Golf Club, Inc. with the Willoughby Community Association, Inc. is controlled by this court's decision on the amendment issue. The merger was only accomplished as a result of the amendment to the Original Declaration; and therefore since the amendment is void the merger also has to be voided.
WHEREFORE, IT IS HEREBY ORDERED AND ADJUDGED AS FOLLOWS:
1. Judgment is entered in favor of the Plaintiffs, ANTHONY J. GRANUZZO and JANE F. GRANUZZO, on Counts I and II of the Amended Complaint against Defendants, WILLOUGHBY GOLF CLUB, INC., GEORGE F. MCLEAN and JOAN T. MCLEAN.
2. The Amended and Restated Declaration of Covenants, Conditions and Restrictions for Willoughby Golf Club, Inc. recorded in the Public Records of Martin County, Florida on December 22, 2003, at Official Records Book 1850 at page 2322, et seq., is void and unenforceable ab initio.
3. The articles of Merger, Plan of Merger and Amendment to the Articles of Incorporation of Willoughby Community Association Inc. now known as Willoughby Golf Club, Inc. filed with the Secretary of state on December 12, 2003, are void and unenforceable, ab initio.
4. Defendant, WILLOUGHBY GOLF CLUB, INC., shall make restitutions to Plaintiffs of:
A. All monies paid as Amenity Fees (and that portion of the Base Assessment which replaced the Amenity Fees).
B. All monies paid toward the food and beverage minimum, including sales tax thereon, except for food and beverage actually consumed by Plaintiffs.
C. Any special assessments for repair of the clubhouse and other Golf Club facilities.
5. If the parties are unable to come in agreement as to the exact amounts to be paid pursuant to paragraph 4 above, the court reserves jurisdiction for an evidentiary hearing to determine those amounts.
6. The court reserves jurisdiction for any post judgmrent matters, and if appropriate, for the award of taxable costs and attorneys' fees.
DONE AND ORDERED this 17 day of January, 2008, in Chambers, at Stuart, Martin County, Florida.
MARK B. SCHORR, ESQUIRE
800 SOUTHEAST 3rd AVENUE, SUITE 300
FORT LAUDERDALE, FLORIDA 33316
HOWARD E. GOOGE, JR., ESQUIRE
P.O. BOX 66
STUART, FLORIDA 34995-0066
STUART, FLORIDA 34\995-2421